Budget Calculations from Chapter 8 of textbook

SKILLS BUILDING: BUDGET CALCULATIONS

Answers follow at the end of the chapter.

2. The members of our visual art society are asked to contribute works to an annual auction to raise
funds for the association's work. Estimate art auction revenue and commission on sales under the
following conditions:

 We've agreed to pay our artist-donors 15% of whatever we receive for each painting
 The fundraiser says we've received donated art worth $45,000 fair market value (FMV)
 Ticket sales to the event are going well, and some of our biggest supporters will be coming. This
usually means that revenues will be good, so the fundraiser thinks we can count on making 15% -
20% above fair market value
 You decide to budget revenues at 18% above FMV

3. We're having a fundraising event. Our volunteer committee opted for something fairly easy to
organize – they're taking our museum supporters out for an evening at the theatre. Set up a
fundraising project budget (that is, show revenue, expense and surplus or deficit) using the following
assumptions:

 Tickets are regularly $24, and the theatre offers a 10% discount for groups. However, if we can
round up at least 30 people, they'll cut their price by one-third.
 We estimate that we can attract 40 people, and charge them $50
 For this, they'll receive wine and cheese at intermission in the theatre's private lounge.
 For $12/person, the theatre will provide wine, platters of cheese, crackers and grapes, and a
bartender.

5. We're thinking about offering theatre classes in the studio for two weeks this summer. Calculate what
we would need to charge per registration to break even under the following conditions. Round your
answer up to the next $5.00.

 Classes would run Monday - Friday, 9:00 to 4:00 with an hour lunch break
 We think we can fill a class of 15 students
 The instructor we'd like to hire charges $40/hour
 We estimate it will take 2 days of administrator time to handle registrations, accounting, and other
tasks. Our administrator is paid $27,500.
 We've allowed $1,500 to promote the program

6. We want to offer a creative arts experience for young children for two weeks this summer. Calculate
how much we need to charge per registration to break even under the following conditions, and round
your answer up to the next $5.

 Classes would run Monday - Friday, 9:00 to 12:00

 We plan to have an artist-instructor, paid $35/hour, who would lead the children in fun arts and
craft projects using simple materials, mainly donated or brought from home.
 We also want to hire two high-school-aged counselors, paid $10/hour, to assist the instructor,
ensure proper supervision and generally to help run the program.
 We think we can attract 25 students
 We're budgeting $15 per child per day for art supplies, snacks and general costs
  We estimate that it will take about 3 days of administrator time to look after registrations,
accounting, and other tasks. Our administrator is paid $26,000.
 We've allowed $1,000 to promote the program in the community

7. One of your Board members is pushing you to accept 30 registrants to the creative arts experience
summer program. On strictly financial terms, would you go ahead? Explain why adding students
reduces the registration fee per student.

8. We just heard that our application for a $2,500 municipal grant for this program was successful. The
grant will be used to reduce registration fees, so the program is more affordable for families.
Recalculate both the 25-student and 30-student budgets to show the new, subsidized registration
fees. Again, round your answer up to the next $5. Explain why the municipal grant makes less of a
difference to the registration fee for the 30-student program than for 25 students.

10. How many registrants would we need in order for our professional development seminar to break
even with the following expense budget? Based on past experience, we don’t think we can charge a
registration fee of more than $75.00 per person.

Instructor fee $ 1,250.00

Room rental 325.00
Promotion 450.00
Administration 600.00
Materials 12.50 per person
Refreshments 5.00 per person